Chronic Joblessness Bites Deep

Long-Term Unemployment Hits New High, Cuts Across Income Levels, Demographics

ENLARGE

Richard Moran, sitting in his garage in Ortonville, Mich., Tuesday, has been unemployed for two-and-a-half years after losing his job with Chrysler.
Fabrizio Costantini for the Wall Street Journal

By

Sara Murray

Updated June 2, 2010 12:01 a.m. ET

The job market is improving, but one statistic presents a stark reminder of the challenges that remain: Nearly half of the unemployed—45.9%—have been out of work longer than six months, more than at any time since the Labor Department began keeping track in 1948.

Even in the worst months of the early 1980s, when the jobless rate topped 10% for months on end, only about one in four of the unemployed was out of work for more than six months.

Overall, seven million Americans have been looking for work for 27 weeks or more, and most of them—4.7 million—have been out of work for a year or more.

Long-term unemployment has reached nearly every segment of the population, but some have been particularly hard-hit. The typical long-term unemployed worker is a white man with a high-school education or less. Older unemployed workers also tend to be out of work longer. Those between ages 65 and 69 who still wish to work have typically been jobless for 49.8 weeks.

Still Out of Work

The effects of long-term unemployment are likely to linger when the overall jobless rate falls toward normal, threatening to create a pool of nearly permanently unemployed workers, a condition once more common in Europe than in the U.S.

"The consequences are worse for those who can't find a job quickly," said Till Marco von Wachter, a Columbia University economist. They extend from atrophying skills to a higher likelihood of unhappiness and anxiety. Workers out of work for a long time tend to find it more difficult to find a job, and "the longer people are unemployed the more likely they are to eventually give up searching and thereby drop out of the labor force," Mr. von Wachter said.

The typical unemployed worker, regardless of occupation, had been unemployed for a seasonally adjusted 21.6 weeks as of April. Because of the deep recession, Congress extended jobless benefits to a maximum of 99 weeks in states with high unemployment. Those extended benefits will expire if Congress doesn't act; the Labor Department estimates that 19,000 jobless workers could start losing benefits in the first week of June. The House has voted to extend the benefits; the Senate hasn't yet.

While blue-collar and construction workers have been battered by the recession, they aren't the only ones hit. Unemployed production workers, including toolmakers, woodworkers and food processors, have been out of work for a median of 38.1 weeks. Unemployed workers whose most recent job was in management, business and financial operations have typically been out of work for 32.3 weeks.

Richard Moran of Ortonville, Mich., the state with the highest U.S. unemployment rate, hasn't had a job for two-and-a-half years. The 57-year-old, who was laid off from a testing and design job for Chrysler Group LLC, suspects his age is working against him.

Mr. Moran has attended two free training programs. The first, to become a corrections officer, ended at roughly the same time that Michigan was closing prisons amid tightening budgets. He recently finished an auto-parts design course to refresh his skills. "The certificates are piling up," said Mr. Moran, who also has a four-year college degree in mass communications.

While education is helpful, college graduates have also fallen into the ranks of the long-term unemployed. They represent 15.9% of the long-term jobless, compared with 14.9% of all unemployed workers. Those with high school degrees who haven't been to college comprise 40.7% of long-term unemployed, compared with 37.8% of all unemployed workers.

Mr. Moran's wife earns a good salary at Baker College so the couple has been able to keep up on the mortgage and other bills, but they have cut back on extras. Meanwhile, their 19-year-old daughter snagged two jobs at a nearby mall. "It's very depressing when your daughter's got two jobs, your wife's got a good job, and you can't find anything," he said.

Mr. Moran said he feared the shame and anxiety of long-term unemployment would overwhelm him. He grew depressed and withdrawn before discovering free therapy sessions at a nearby college, which he now attends in addition to taking antianxiety medication. "It seems like no matter what I do, it fizzles," he said. "But there's always a hope."

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